Task Force Report: International Trade Law Implications of Legalization

March 07, 2017

In this edition of our series on the Task Force’s final report "A Framework for the Legalization and Regulation of Cannabis in Canada" (the "Report"), we explore the international trade law implications of the Task Force’s recommendations in the Report.

International Conventions

The Task Force noted that its mandate excluded consultations and recommendations on how Canada should reconcile the legalization and regulation of cannabis with its international treaty obligations under the Single Convention on Narcotic Drugs, 1961 (as amended by the 1972 protocol), the Convention on Psychotropic Substances, 1971 and the Convention against the Illicit Traffic in Narcotic Drugs and Psychotropic Substances, 1988 (the "Conventions"). Ignoring Canada's international obligations under the Conventions is a practical necessity to achieving the legalization and regulation of cannabis as the Conventions require its signatories (including Canada) to criminalize the production, sale and possession of cannabis for non-medical and non-scientific purposes.

The Task Force tactfully acknowledged the tension between non-medical legalization and Canada's international obligations, but encouraged Canada to innovate. The Report referred to a growing interest among many governments in alternative approaches to cannabis regulation, such as decriminalization in Europe and Latin America, and full legalization in Uruguay and in several U.S. states and noted that:

Canada’s proposal to legalize cannabis shares the objectives agreed to by member states in multilateral declarations, namely: to protect vulnerable citizens, particularly youth; to implement evidence-based policy; and to put public health, safety and welfare at the heart of a balanced approach to treaty implementation.

Canada will join Uruguay as the second signatory to the Conventions to legalize non-medical use of cannabis. Canada, the Task Force observed, can provide an important model on the structure and implementation of cannabis regulatory regimes to inform the responses of other governments to changing attitudes on cannabis controls.

Import/Export Considerations

One of the Task Force's central recommendations is the maintenance of parallel regimes for medical and non-medical cannabis. Dual regimes for cannabis based on end-use can be expected to mitigate risks to Canada's international trade in medical cannabis created by non-medical legalization, but may entail additional complexity for licensed producers ("LPs").

Exports and imports of medical cannabis are currently regulated under the Access to Cannabis for Medical Purposes Regulations ("ACMPR"), which implement the Convention rules on the authorization of the importation and exportation of medical cannabis.

The Report recommends the maintenance of a separate medical access framework to support patients. To date, Health Canada has authorized limited but critical exportations and importations of cannabis to and from Convention signatory states under the ACMPR and its predecessors. Canada's growing international trade in medical cannabis is made possible by the ACMPR and will be expected to continue after Canada introduces non-medical use legislation.

Legalization of non-medical cannabis will likely change the form but not the content of the current prohibitions on the importation and exportation of non-medical cannabis. As our trading partner signatories to the Conventions by and large criminalize cannabis, Canada may be expected by such partners to continue to prohibit the importation and exportation of non-medical cannabis, failing which the foreign jurisdiction may refuse to issue the applicable import/export permit.

The dichotomous medical and non-medical regulatory regimes can foreseeably create challenges for LPs and regulators and pose risks to Canada's trade in medical cannabis. Presumably, the competent authorities in other countries currently authorize exportations and importations of medical cannabis to and from Canada because Canada has implemented the Conventions’ rules on the importation and exportation of cannabis for medical purposes under the ACMPR. When non-medical legalization occurs, will Canada's trading partners balk at authorizing exportations and importations of medical cannabis to and from Canada on the grounds that such cannabis may be diverted to, or derived from the non-medical market in Canada? This issue may be especially pertinent for new LPs who seek to import cannabis starting materials from foreign legal jurisdictions as the competent authorities from the exporting jurisdiction may seek additional assurances that the exported genetics remain exclusively within the medical regime.

In a similar vein, other governments may refuse to authorize importations of medical cannabis from Canada unless it can be established that the product was produced and licensed under the medical regime, as opposed to the non-medical regime.

Production and distribution firewalls between medical and non-medical cannabis may be needed to comply with international trade rules applicable to medical cannabis. How Health Canada establishes and enforces the line between medical and non-medical cannabis cultivation and distribution will be critical issues that will need to be carefully considered to ensure that Canadian companies continue to have access to imported foreign genetics and that Canada remains a global leader in the nascent cannabis industry.

The above update provides a brief overview of the Task Force’s recommendations and international trade law. It is important to remember that cannabis law is complex and rapidly evolving. At Bennett Jones LLP, we have a team of industry-leading professional advisors that can provide legal and strategic guidance to all industry participants as the Canadian cannabis industry continues to advance.